<html><body><div style="color:#000; background-color:#fff; font-family:times new roman, new york, times, serif;font-size:12pt"><div><span></span></div><div><br></div> <div style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div dir="ltr"> <font size="2" face="Arial"> ----- Forwarded Message -----<br> <b><span style="font-weight: bold;">From:</span></b> Hugh Whinfrey <market@svarsmaal.dk><br> <b><span style="font-weight: bold;">To:</span></b> gang8@yahoogroups.com <br> <b><span style="font-weight: bold;">Sent:</span></b> Friday, 5 October 2012, 11:46<br> <b><span style="font-weight: bold;">Subject:</span></b> Re: [gang8] writedown debts?<br> </font> </div> <wbr><div id="yiv730404091">
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<div><font size="2" face="Arial">Thanks Dirk. Keen's current business partner saw my
original proposal for this </font></div>
<div><font size="2" face="Arial">methodology quite some time ago </font><font size="2" face="Arial">on another mailing list :-)) He later left it</font></div>
<div><font size="2" face="Arial">in a huff that I thought was a bit irrational. I'm
starting to connect some dots now....</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">A couple other points I should make</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">1) I don't see where it is fully sufficient
to </font><font size="2" face="Arial">confiscate the "weapons" of the 1
percent.</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">The real issue is the disappearance of the middle
class and that the middle class</font></div>
<div><font size="2" face="Arial">needs to be recapitalised - and if that can be done
without the </font><font size="2" face="Arial">1% standing in the</font></div>
<div><font size="2" face="Arial">way of the critical path of it, then the
justification for pursuing it becomes one of ethics</font></div>
<div><font size="2" face="Arial">and practicality rather than absolute necessity.
</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">So what I had in mind was on the order of
</font><font size="2" face="Arial">EUR 10,000 per year per taxpayer, </font></div>
<div><font size="2" face="Arial">or more, for a number of years. Young people
in their 20s these days in both</font></div>
<div><font size="2" face="Arial">Euroland and the US </font><font size="2" face="Arial">are in an impossible situation without this kind of help,</font></div>
<div><font size="2" face="Arial">they are being marginalised before they even leave
school.Which means that </font></div>
<div><font size="2" face="Arial">the 1% are otherwise going to have to fork out
massive social transfer payments,</font></div>
<div><font size="2" face="Arial">and that's no way to run an economy.</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">2) One of the major problems we have encountered in
the markets is shorting and </font></div>
<div><font size="2" face="Arial">naked shorting. </font><font size="2" face="Arial">It
seems some jurisdictions allow the money received in a short</font></div>
<div><font size="2" face="Arial">sale to be spent and never, ever booked as profits
if the short is never formally closed. </font></div>
<div><font size="2" face="Arial">So taxes </font><font size="2" face="Arial">are
avoided, and operating capital is manufactured for nothing if the short
is</font></div>
<div><font size="2" face="Arial">naked, particularly if the underlying is driven out
of business. The issue is - what is the </font></div>
<div><font size="2" face="Arial">interrelationship of "debt forgiveness" with this
practice. It *needs* clarification as</font></div>
<div><font size="2" face="Arial">it can look like simply a tax-avoidance and
prosecution-avoidance endgame in relation</font></div>
<div><font size="2" face="Arial">to these practices. </font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">So the terms and conditions of what is going on
with it need some work.</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">Hugh</font></div>
<blockquote style="border-left-color: rgb(0, 0, 0); border-left-width: 2px; border-left-style: solid;" dir="ltr">
<div style="font: 10pt/normal arial; font-size-adjust: none; font-stretch: normal;">----- Original Message ----- </div>
<div style="background: rgb(228, 228, 228); font: 10pt/normal arial; font-size-adjust: none; font-stretch: normal;"><b>From:</b>
<a title="d.j.bezemer@rug.nl" href="mailto:d.j.bezemer@rug.nl" rel="nofollow" target="_blank" ymailto="mailto:d.j.bezemer@rug.nl">D.J.Bezemer</a>
</div>
<div style="font: 10pt/normal arial; font-size-adjust: none; font-stretch: normal;"><b>To:</b> <a title="gang8@yahoogroups.com" href="mailto:gang8@yahoogroups.com" rel="nofollow" target="_blank" ymailto="mailto:gang8@yahoogroups.com">gang8@yahoogroups.com</a> </div>
<div style="font: 10pt/normal arial; font-size-adjust: none; font-stretch: normal;"><b>Sent:</b> Friday, October 05, 2012 12:52
PM</div>
<div style="font: 10pt/normal arial; font-size-adjust: none; font-stretch: normal;"><b>Subject:</b> Re: [gang8] writedown
debts?</div>
<div><br></div>
<div>Hugh, good plan, on the same principle as Steve Keen has proposed (I
think he explained it in a BBC Hard Talk Interview - you'ff find
it Googling).</div>
<div> </div>
<div>My reply plan to Gunnar had the disadvantage that it helps ONLY
mortgaged households, which is politically a no go (and rightly so).</div>
<div> </div>
<div>I wil try to put some Dutch numbers on this to illustrate. </div>
<div> </div>
<div>We will only be taken serious with serious, simple-design, workable
plans. </div>
<div> </div>
<div>Even so, immediately cries of 'inflation! Weimar' will be the response.
Knee jerks. </div>
<div> </div>
<div>Dirk </div>
<div> </div><span>On 04-10-12, <b class="yiv730404091name">Hugh Whinfrey
</b><market@svarsmaal.dk> wrote:</span>
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<div><font size="2" face="Arial">Geoffrey writes:</font></div>
<div><font size="2" face="Arial"></font> </div>
<div>>So come on all. Let us have some constructive, well thought
out, </div>
<div>>viable plans for rebalancing society without wrecking the
economy </div>
<div>>in the process. Let us get on with the hard work.</div>
<div> </div>
<div><font size="2" face="Arial">Here's a stab at it, I have proposed
something similar elsewhere in the past:</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">--------------------------------------------------------------------------------------------------------------</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">I see several issues to a
write-down.</font></div>
<div><font size="2" face="Arial"></font> </div>
<div><font size="2" face="Arial">1. Fairness/equity.<br>2.
Simplicity/minimal administrative costs.<br>3. Economic stimulus for
business.<br>4. Actual debt level reduction.</font></div>
<div><font size="2" face="Arial">5. Rectification of impractical and
dysfunctional imbalances.</font></div>
<div><font size="2" face="Arial"><br>Try this for a rough sketch for a
solution:</font></div>
<div> </div>
<div>Agree to waive the structure of the present financial system for
a pre-defined period of, say 10 years, and let the national treasuries
'print' money by crediting individual taxpayers (i.e. a rough proxy
for 'the labour force') with a specific and rather large amount each
year for this special period. Created out of thin air (we do know how
to do that).</div>
<div> </div>
<div>Then take the existing taxation system, and drive it in reverse
to dispense these credits to the individual taxpayers. The exact
same tax-free sum for each taxpayer for each of these years. That is
the crucial part. </div>
<div> </div>
<div>It must not be a token amount but rather an annual amount
carefully calculated to actually fix a set of problems.</div>
<div> </div>
<div>So the mechanism to do these "helicopter drops" is already there.
The income tax system can continue to operate as normal otherwise.
This credit would be just another line item on the form and the
(whopping) bottom line would then be refunded as usual.</div>
<div> </div>
<div>These annual amounts should be calculated so as to bring
'average' households with troubled mortgages and/or excessive debt
down to a managable level. Households worse off than than this level
will still fail and those better off will have a tidy surplus that
will go into bank deposits that will provide the needed economic
stimulus once lent out with all the attendant leverage involved. No
individual can complain of unfair treatment and business can get back
on its feet. The key there is that business entities have to
earn their way out of any of their debt problems. With plenty of
money around now for them to chase in 'the old-fashioned way', they
will do so. Just let capitalism do its thing there and knock off
the bailouts. Businesses that can't cut it in the 21st century
need to die rather than be put on life support. So the garbage needs
to be cleared away regardless. Bailing them out with subsidies
doesn't achieve that and if we're doing some wholesale proverbial
urban renewal then this is the time to do that. </div>
<div> </div>
<div>If this is done across the board in the EU, US and Japan
simultaneously the relative currency effects within the block will not
be particularly disruptive. Much dubious debt will actually be paid
off because the debtors will have the cash to service and pay down the
loans to more reasonable levels, i.e. even the businesses by wayof
earnings.</div>
<div> </div>
<div>Yes, it will be somewhat inflationary, but the inflation will
contribute to the solution too. Such a plan should at least allow us
to avoid the hyperinflation endgame that probably is in the cards
otherwise. And this is also why it should be spread over a
pre-determined fixed period of years. The additional effect of this
stimulus generating actual real economic activity should also work to
contain the inflationary effects.</div>
<div> </div>
<div>I can note that this might mean some nasty things for
bondholders. Although, I have severe doubts that rates will stay at
zero forever, so that isn't in my opinion a sufficiently good
objection to going forward with something like this, i.e. bondholders
are ultimately going to take it on the chin anyway.</div>
<div> </div>
<div>Also, I would bet that politicians supporting and implementing
this would find themselves on a fast inside track to re-election,
which is a considerable point in its favour. A chicken in every pot
works much better than confiscating the contents of a voter's
pantry.</div>
<div> </div>
<div>About the only other thing I would add is that doing a major
re-think of the educational system at the same time is probably
appropriate too. The skills folks need for the future will be
different. Self-sufficiency skills and business skills need to be
taught beginning in the primary schools. At present we're just
educating kids to live off of public assistance. Teach them how to
fend for themselves and most will actually be able to do so. At the
very least how to grow your own food, do basic accounting and some
basic marketing/sales procedures.</div>
<div> </div>
<div>Hugh</div>
</div></td></tr></tbody></table></span></div></blockquote>
<div> </div>
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